2. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 1 Financial Audit of Autonomous Bodies

3. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 2 Course Objective At the end of the training course the trainees will be able to state the: Audit Mandate, Audit Objective, Audit Scope, Audit Process, Auditing Standards of IAAD, Important Accounting Standards, and

4. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 3 Course Objective the Uniform Format of financial statements applicable to the Central Autonomous Bodies to the extent that the trainees can apply the knowledge and skill in the financial audit of Autonomous Bodies

5. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 4 Course Outline Topics Included are: Introduction to legal framework for the audit of Autonomous Bodies Audit Objective, Audit Scope and Audit Process

6. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 5 Course Outline Introduction to Accounting Standards and Accounting Standard 1 and Accounting Standard 4 Accounting Standard 5 Accounting Standard 9 Accounting Standard 6

7. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 6 Course Outline Accounting Standard 10 Accounting Standards 12 Accounting for Government Grants Accounting Standard 13 and Accounting Standard 15 Internal Control and Risk Assessment

8. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 7 Course Outline Uniform Format of Accounts for the Central Autonomous Bodies Certification of Accounts-Group Work Reporting Standards and Drafting of Audit Reports and Audit Comments Conclusion and valediction

9. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 8 Introduction to legal frame work for the audit of Autonomous Bodies

10. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 9 During this session we will learn 1.The importance of audit mandate; and 2.Legal framework for audit of autonomous bodies under the Constitution of India

11. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 10 Learning Objective At the end of this session, the learner will be able to state the importance of audit mandate and apply Constitutional provisions to the audit of autonomous bodies.

12. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 11 Basic concepts Authority is a person or a body exercising power or command. An authority can be a single person or an association or aggregate of persons legally able to exercise command. Body is an aggregate if persons, incorporated or unincorporated.

13. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 12 Knowledge of legal mandate- why? 1.To know any limitation imposed on audit work; 2. To identify and apply legal provisions for conducting the audit; 3. To ensure that requirements of the law are fulfilled;

14. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 13 Knowledge of legal mandate- why? 4. To make sure that audit approach is in accordance with the Indian Audit and Accounts department’s policy, procedures and directions; 5. To ensure that the audit objective meets the requirement of legislation; 6. To identify the addressee and end-users of the Audit Report.

15. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 14 Constitutional Provisions Under the Constitution of India, CAG shall have the power to audit the expenditure incurred out of the : Consolidated Fund of India; Consolidated Fund of a State; Consolidated Fund of a Union Territory;

16. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 15 Constitutional Provisions The expenditure may also take the form of Grants and/or Loans to a Body or authority;

17. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 16 Constitutional Provisions The duties and powers of the CAG in relation to grants/loans to autonomous bodies have been enshrined in the sections 14, 15, 19 and 20 of the DPC Act

18. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 17 Audit under Section 14(1) –Any body or authority is deemed to be substantially financed if the amount of loan and/or grant in a financial year is not less than Rs. 25 lakh and also is not less than 75% of the total expenditure of that body or authority during that year.

19. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 18 Audit under Section 14(2) CAG may with the previous approval of the President/Governor/Administrator audit all receipts and expenditure of any body or authority where the grants/loans in a financial year is not less than rupees one crore.

20. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 19 Audit under Section 14(3) Audit under 14(1) or 14(2) to be followed by audit for a further period of 2 years, even if conditions stated in 14(1) and 14(2) are not met in those years.

21. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 20 Audit under Section 15(1) where any grant/loan is given for any specific purpose from the Consolidated Fund, the Comptroller and Auditor General of India shall scrutinize the procedures by which the sanctioning authority satisfies itself as to the fulfillment of conditions— and shall for this purpose have right of access

22. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 21 Audit under Section 15(1) (after giving reasonable previous notice) to the books and accounts of that body/authority (except foreign governments/international organizations). President/Governor/Administrator may relieve Comptroller and Auditor General of India in public interest of this duty.

23. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 22 Audit under Section 15(2) except where he is authorized to do so by the President/Governor/Administrator, the Comptroller and Auditor General of India shall not, while exercising the powers conferred on him by Section (1), have right of access to the books and accounts of any corporation to which such grants/loan as is referred in Sub-section (1) is given if the law by or under which such corporation has been established provided for audit by an agency other than the Comptroller and Auditor General of India.

24. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 23 Audit under Section 15(2) Provided that no such authorization shall be made except after consultation with the Comptroller and Auditor General of India and except after providing the concerned corporation a reasonable opportunity of making representation with regard to the proposal to give to the Comptroller and Auditor General of India right of access to its books and accounts.

25. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 24 Audit under Section 19(1) The duties and powers of the Comptroller and Auditor General of India in relation to the audit of accounts of government companies shall be performed and exercised by him in accordance with the provisions of Companies act, 1956.

26. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 25 Audit under Section 19(2) The duties of the Comptroller and Auditor General of India in relation to the accounts of corporations established by or under law made by parliament shall be performed and exercised by him under the provisions of the respective legislation.

27. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 26 Audit under Section 19(3) The Governor/Administrator may, where he is of the opinion that it is necessary in the public interest to do so, request the Comptroller and Auditor General of India to audit the accounts of a corporation established by law made by legislature and where such request has been made the CAG shall audit the accounts of such corporation (with access to records).

28. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 27 Provisions of Section 19 (A) Provided that no such request shall be made except after consultation with the Comptroller and Auditor General of India and after giving reasonable opportunity to the corporation to make representations with regard to the proposal for such audit.

29. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 28 Provisions of Section 19 (A) 19(A)(1)the Reports of the Comptroller and Auditor General of India in relation to the accounts of a Government Company or corporation referred to in section 19 shall be submitted to the Government or Governments concerned, who shall cause them to be laid on the floor of the respective Legislature.

30. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 29 Audit under Section 20(1) Save as provided in Section 19, where the audit of the accounts of any body or authority has not been entrusted to the Comptroller and Auditor General of India by or under any law made by parliament, he shall if requested to do by the President/Governor/Administrator undertake the audit of accounts of such body or authority on such terms and conditions as may be agreed upon between him and the concerned government and for this purpose of such audit shall have right of access to books and accounts of that body or authority.

31. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 30 Audit under Section 20(1) Provided that no such request shall be made except after consultation with the Comptroller and Auditor General of India.

32. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 31 Audit under Section 20(2) The Comptroller and Auditor General of India may propose to the President/Governor/ Administrator that he may be authorized to undertake the audit of the accounts of any body or authority, the audit of the accounts of which has not been entrusted to him by law, if he is of the opinion that such audit is necessary because a substantial amount has been invested in or advanced to such body or authority by the Central/State/Union Territory,

33. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 32 Audit under Section 20(2) and no such request being made, the President/Governor/Administrator may empower the Comptroller and Auditor General of India to undertake the audit of the accounts of such body or authority.

34. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 33 Audit under Section 20(3) The audit under section 20(1) and 20(2) shall not be entrusted to Comptroller and Auditor General of India except where the President/Governor/Administrator is satisfied that it is expedient so to do in public interest and except after giving a reasonable opportunity to the concerned body or authority to make representations with regard to the proposal for such audit.

35. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 34 Annual accounts of autonomous bodies The position in regard to number of autonomous bodies (Central) whose accounts were to be audited by the CAG under Sections 19(2) and 20(1) and 14(1) and 14(2) of the Act and the position of grants/loans received by these bodies during 2000-01 to 2002-03 was as under:

36. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 35 Year 2000-01 Number (for which figures available) SectionGrant (Rs/crore) Loan (Rs/crore) 226(203)19(2), 20(1)6686.61300.57 139(40)14(1), 14(2)193.16nil

37. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 36 Year 2001-02 Number (for which figures available) SectionGrant (Rs/crore) Loan (Rs/crore) 226(198)19(2), 20(1)5745.19248.41 153(45)14(1), 14(2)226.01nil

38. Financial Audit Autonomous Bodies Legal framework for Audit Session 1.1 37 Year 2002-03 Number (for which figures available) SectionGrant (Rs/crore) Loan (Rs/crore) 228(196)19(2), 20(1)5458.84258.37 161(84)14(1), 14(2)1343.94624.84